Virus or no virus, there are buyers out there wanting to purchase but aren’t yet quite in a position to do so.
These are potential future clients, but only IF you can establish rapport earlier than your competitors.
The key is for you to develop “a specific listening skill” for which renters are who are “mulling it (homebuying) over” in their mind, so you can then engage them with a conversation
Once rapport is established, the next step is to evaluate which potential buyers have a real CAPACITY to follow through with their desire to purchase.
Click on the post below, which I’ve self-authored that will go a long way towards deterring who has that CAPACITY!
Are Your Buyers Serious? Or Just Working You
Below is an (abbreviated) post from Inman! Enjoy the post & stay safe!
Renting a place to live may give a renter the freedom to move & relieves ownership responsibilities, but most people yearn for their own home.
Here are 8 signs a renter is ready to go from renter to homeowner.
1. Buyers Are Tired of Rising Rent Prices
Paying rent is a bad investment for the future. Overhear a renter complaining about a rent increase?
FOCUS ON THEM! The higher the rent increase, the more the resentment and the higher the motivation is for the renter!
Rising rents (vs. a stable house payment) makes it harder to budget for monthly housing costs and save for other financial goals.
Also, many renters are motivated by ownership and simply want more control over their dwelling (i.e. pets).
Survey: “Stigmas” Against Renters
Buying vs. Renting: 56 Pros and Cons
2. Credit Scores Have Improved
“Our credit score is ____(high)” is a statement that often is a precursor to house hunting! Good credit scores get buyers a better interest rate, loan terms, and higher purchase prices.
Low Fico scores are the most common reason renters can’t buy; usually, low scores are due to a history of late payments and /or too much debt. Credit Re-Scoring vs. Credit Repair
These FICO Myths are Killing Credit Scores!
When renters apply for a loan, they need to get a copy of their mortgage credit report. Free credit reports are virtually worthless when evaluating a buyer for a home loan.
Tax liens and court judgments can be a big deal and credit score killer as well. Buyers with a credit score as low as 620 can qualify for a home loan but often have to make a bigger down payment or pay a higher interest rate.
3. Managing Debt
“We just paid off all of our debts,” many young couples proclaim.
That’s your “cue” to start establishing rapport.
When screening mortgage applicants, lenders look at a buyer’s debt-to-income ratio, or “DTI”.
The key calculation is adding up a buyer’s total monthly debts, dividing the total by a gross monthly income arriving at a “debt to income ratio” (DTi) .
Mortgage brokers typically allow a DTI ratio of up to 49% for Fannie Mae and VA loans and as high as 60%+ more for FHA loans.
Because of the lending abuses that brought on the “Great Recession” and the Dodd-Frank lending reforms, institutional lenders (banks – credit unions & so-called “mortgage bankers”) have a “drop dead” DTI of 43%.
But there can be exceptions under the right conditions!
High Debt Ratio FHA & VA (65% – DTI)
A higher DTI level translates into a buyer’s increased purchase power AND whether we both earn a commission check.
To determine (literally to the decimal point) what a buyer qualifies for – direct your buyer to work with an MLO that goes thru the entire automated underwriting process and obtain a Fannie / FHA / VA case number.
Few lenders go the extra step of formally inputting a buyer’s complete documentation and issuing full disclosures, as the entire process takes an additional 2-3 hours (vs. just issuing a prequal letter).
10 Reasons Why Loans Close Late OR Applicants Get Denied
Every (responsible) lender does a prequal interview; but pre-qual letters are worthless. Truly worthless. If you’re an experienced agent – you’ve already found this out!
Why Pre-Approval Letters are Worthless!
“DU” Loan Approvals – Never Lose a Buyer Again
4. Buyers Have Enough Reserves for Owning A Home
Commission alert! When buyers have a nest egg, they most often begin making decisions about their long term future.
“We have a lot in our 401k”. We’ve saved $______. Our parents will co-sign!
Using Retirement Funds to Buy a Home
Housing is usually at the top of the list!
5. Buyers Can Afford the Down Payment and Closing Costs
“How much money do we need for a downpayment? Bingo! You just made contact with a serious potential buyer.
The down payment required depends on the type of loan. For Fannie Mae loans, 5% down is required – FHA loans require 3.5% down “Zero” down for VA loans to our nation’s heroes.
Another expense buyers have to be ready for is the closing costs and impounds, which typically equal 1.5% of the property’s sale price.
The good news is that some closing costs are negotiable. There are ways to lower closing costs to zero!
Negotiating for “Seller Paid” Closing Costs!
6. Buyers are Ready to Settle Down in One Place
“My spouse just got a promotion/new employment, or “we need a specific school district” are sure signs of people putting down roots.
Stable employment/income are the best indicators of future homeownership.
7. A Major Life Change
“We need more/less space” (an addition to the family member), or “our youngest is going to college” (“empty nesters”), or “we’re getting a divorce;” are all statements that are predictive of a significant housing change.
Renters (and current homeowners) most often decide to purchase a home after a significant life event; marriage/divorce, an addition to the family (i.e. newborn or elderly parent arrive), a new job, or children leaving the nest are the most common reasons.
“Corporate relocation” can be another catalyst, as many corporations will pay closing costs for employees to relocate!
8) Buyers Know Exactly What They Want
Usually, it’s a specific school district (50%), close proximity to work and other family members are compelling reasons for homeownership!
California Renters Pay Up to 46% More to be Near Top Schools
For other buyers, a specific home type is also a significant consideration, especially for senior citizens; (one story is usually preferred vs. a home with stairs).
Houses, townhouses, condos, co-ops, duplexes offer distinct advantages for costs, upkeep and personal enjoyment.
In Closing!
“Being on your toes.”; in real estate sales translates into “having good listening skills” to have a long and successful career. Good luck.